Sorry your in a fix with this .. but let's put our heads together.
In telling your MIL the 'truth', you've already learnt that upsets her. Logic should prevail in figuring out how to
NOT upset her.
In telling her the truth, and upsetting her, what is gained? Yes, you've told her the truth ... but so?
By telling her 'he's on the train and due home tomorrow' help? What did your father in law do when he was alive? Was he ever away from home? Call on historical stories from his working days. Remember, she is now unable to come into our 2007 world, she's going backwards. It's cruel to try and make her see things our way, it's really NOT going to hurt her if you tell some little white lies to keep the peace.
My favourite saying is:
"I'll promise them the world if it makes them happy"
who's it gonna hurt eh?
Goodluck, let us know how you get on.
Cheers